What goes around comes around…

“We firmly believe that a circular economic model is fundamental for ensuring the future not just of the economy but of the planet itself.” That is the view of Mauro Micillo, head of the corporate and investment banking division at Intesa Sanpaolo, Italy’s biggest bank.

Share this story

“The shift from a ‘linear’ to a ‘circular’ way of doing business will be one of the medium- and long-term goals for Intesa Sanpaolo,” he added.

Micillo was speaking at the FT Circular Economy Summit in London – organised by the Financial Times newspaper. He advocates a move away from the make-use-dispose model of a linear economy, familiar to citizens of the Western world, towards a circular model based on re-use, regeneration and designing out waste.

“In the current, linear way of doing things, the exploitation of natural resources to drive economic activity leads to more than 11 billion tons of waste a year worldwide,” Micillo said. So, he asked, as the 21st century progresses, how much longer can the Earth bear it as those resources become scarcer and scarcer?

Other speakers at the summit predicted that by 2050 there will be – by weight – more plastic in the sea than fish, given that just 5 per cent of plastic is recycled effectively.

“The shift from a ‘linear’ to a ‘circular’ way of doing business will be one of the medium- and long-term goals for Intesa Sanpaolo,”

Micillo also made the business case for a circular economy, alongside the environmental one. He argued that nowadays “companies are exposed to the volatility of resources – land, energy and raw materials, especially – to fluctuations in prices, and to the loss of value through waste.

“In contrast, it’s estimated that there’ll be a gain of €1.8 trillion in European GDP by 2030 if circular-economy practices are adopted.” Such practices include the redesign of products so that components can be dismantled and re-used (potentially ad infinitum); the use of renewable energies; and the regeneration of available natural resources.

As part of its commitment to the new way of doing things, in 2015 Intesa Sanpaolo became a global partner of the Ellen MacArthur Foundation, whose raison d’être is to accelerate a switch to circular economy through work with business, government and academia worldwide.

“In contrast, it’s estimated that there’ll be a gain of €1.8 trillion in European GDP by 2030 if circular-economy practices are adopted.”

Moreover, together with the Italian Scientists and Scholars of North America Foundation, Intesa Sanpaolo sponsors the ISSNAF Open Innovation and Entrepreneurship Award, this time focused on Circular Economy. The Award consist in a prize for all Italians working in North America who are “dedicated to projects showing the highest potential for, or execution of, the regenerative and restorative principles inherent the circular economy”.

In 2016 the bank also opened an Innovation Centre in its branch in London, where it researches emerging technological trends and where representatives from start-up companies are regularly invited to a day-long conference to share ideas linked to the circular economy. The 2nd edition of the conference – called Circular Economy StartUp Initiative – was held on 26 May, with the help of the Ellen MacArthur Foundation. Eight emerging innovators pitched their solutions for the transition to a regenerative economy, with products, materials and recycling technologies from the construction, packaging, textiles and automotive industries.

“Looking ahead, this is surely the most promising way of doing business,” says Massimiano Tellini, head of Intesa Sanpaolo’s Circular Economy Project. “The circular economy considerably lowers the risk in a company’s business model by lowering its reliance on external factors, from geopolitical uncertainty to sharp change in commodity prices. Decoupling economic and social development from the utilisation of finite natural resources may represent a positive disruption for business and therefore also for supporting financial institutions.”

But what will Intesa Sanpaolo’s day-to-day role be? “It’s certainly not a case of passively waiting for clients to come to us with a loan request,” says Tellini. “We are a relationship-driven bank, who see our clients as partners on a long journey. In advisory sessions with them, we can diagnose and anticipate their needs – and plan how circular they can become, in what way and how soon.

“They’re not homogenous, of course, and each client is at a different moment on a different path to the circular economy – if they’re on it yet at all. But what’s increasingly common is the number of CEOs and CFOs with a readiness to embrace the circular-economic model, aware that this is a global trend with profitable consequences.”

Beyond consultations and business plans, Intesa Sanpaolo offers financial support to a company’s production and distribution processes, too. In many cases – reflecting the fact that the circular economy is, by nature, more collaborative than a linear one – Intesa Sanpaolo may bring in third or fourth parties it knows as business partners, if that’s deemed likely to be beneficial.

“Our approach to circular economy is systemic”

Companies currently working on the circular economy include Apple, Cisco, Enel, H&M, Novamont, Philips, Renault, Unilever and H&M. In the case of H&M, the development of new technology is increasingly allowing used garments to be converted back into textiles. In the case of Cisco, parts of used electronic devices are being redeployed to make new ones

In 10 years’ time, how far along the road to the circular economy does Tellini think the world will be? “In a best-case scenario, very far. To the extent that we’ll be witnessing the reshaping of capitalism itself,” he says.

“The circular economy would lead to an economic model whereby competition for the ownership of assets would be gradually replaced by an inclination to secure access to the service provided by them. Therefore, more value will be extracted from economic activities, while at the same time these same activities will no longer have a negative impact on the natural capital, on which all human activities depend.

“Thanks to such an economic and social innovation, citizens would be in a position of greater power in their own lives. In short, it would mean nothing less than business being a force for good.”